KUALA LUMPUR: Bermaz Auto Bhd (BAuto) is expected to post 14 per cent compounded annual growth rate (CAGR) for financial years 2022 (FY22) to FY24, driven by a stronger portfolio of non-national marques.

Affin Hwang Capital said the gradual recovery in sales volume across its Malaysia and Philippines business would support BAuto's growth in FY22-FY24.

It said lower CBU (complete built-in) volume was mitigated by stronger CKD (completely knocked down) volume growth, while new model launches across the Mazda, Kia and Peugeot marquees for both combustible engine vehicles and electric vehicles (EV) would also support its growth. 

"Nonetheless, we still expect core net margins to fall below pre-pandemic levels considering the higher costs of raw materials and surge in freight costs," it said. 

Affin Hwang said BAuto's FY22 sales volume was expected to reach an eight year low of 12,400 units due to a halt in business operations during the intermittent lockdown periods over the past year.

However, as Malaysia enters the endemic phase of Covid-19, the firm expectsbthe sales volume to recover by 19.8 per cent for FY23 and 20.6 per cent for FY24.

"This will be driven by higher sales volume from Mazda CKD units, Peugeot and Kia as well as the Philippines, which may be partially offset by a lower Mazda CBU sales volume due to the shortage in microchips and supply chain disruption," it said. 

Affin Hwang has increased its earning per share (EPS) forecasts by 1.4-12.1 per cent for FY22-FY24 after increasing its Kia and Peugeot sales volume assumptions.

"Overall, we reiterate our Buy rating on the stock with a higher target price of RM1.98.

"Downside risks to our call are chip supply constraints, a weaker ringgit increasing import costs and prolonged supply chain disruption delaying car deliveries," it added.